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Role of banking sector performance in renewable energy consumption
Luleå University of Technology, Department of Social Sciences, Technology and Arts. Environment for Development Initiative (EfD), University of Gothenburg, Gothenburg, Sweden.ORCID iD: 0000-0002-3581-4704
Swedish Transport Administration, Solna Strandväg 98,171 54 Solna, Sweden.
2022 (English)In: Applied Energy, ISSN 0306-2619, E-ISSN 1872-9118, Vol. 306, no B, article id 118023Article in journal (Refereed) Published
Abstract [en]

To secure future universal access to modern energy, large investments in renewable energy technology are required. This paper estimates the impact of five banking sector performance indicators (return on asset, market capitalisation, asset quality, managerial efficiency and financial stability) on renewable energy consumption for a global panel consisting of 124 countries. The study used two-step system-GMM panel model to handle potential endogeneity and serial correlation. The paper considers three homogenous subpanels which are constructed based on the income group classification (high-, middle-, and low-income countries). Generally, our results show that improved banking sector performance enhances renewable energy consumption, with heterogenous effect across income group classification. For high -income (HI) countries, an increase in bank size together with improved asset quality and managerial efficiency have positive effects on renewable energy consumption. For middle-income (MI) and low-income (LI) countries, a high return on asset, an increase in bank size and financial stability are positive determinants of renewable energy consumption. We also find heterogenous effect of banking performance indicators across various renewable energy consumption types. The results highlight the importance of a well-functioning bank sector to achieve the investment in renewable energy needed to meet future energy demand and simultaneous decrease CO2 emissions.

Place, publisher, year, edition, pages
Elsevier, 2022. Vol. 306, no B, article id 118023
Keywords [en]
Banking performance, CO2 emissions, Energy investments, Renewable energy, Panel data
National Category
Economics
Identifiers
URN: urn:nbn:se:ltu:diva-87880DOI: 10.1016/j.apenergy.2021.118023ISI: 000712031400004Scopus ID: 2-s2.0-85117747752OAI: oai:DiVA.org:ltu-87880DiVA, id: diva2:1610969
Available from: 2021-11-12 Created: 2021-11-12 Last updated: 2022-10-31Bibliographically approved

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Amuakwa-Mensah, Franklin

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